Uh oh! Is this technicality enough to derail payment?
Phil Curran was only too happy to sign the promissory note Bill Walton of Walton Building Supplies had prepared for him. Walton was providing $20,000 in building materials for Phil's home remodeling project, and Phil was securing the note with a mortgage on his house. Two years later, however, Phil had lost his job, and he was in no position to pay off the note. He was bemoaning his situation with Nick Olson, his next-door neighbor, when Nick made an observation. "I don't think this note you signed is any good," Nick told him. "No good?" Phil replied hopefully. "Look at what it says over your signature. It says 'I have fully read and I do clearly understand these conditions and terms.' I don't think that meets state law requirements." Phil did some research and found that state law required that the cautionary language on notes read: "CAUTION--IT IS IMPORTANT THAT YOU THOROUGHLY READ THE CONTRACT BEFORE YOU SIGN IT." Does Phil have a case for abrogating this contract? Make your decision and then click on "next" below for the answer and analysis.
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